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Prior to 1971, the U.S. dollar was tethered to gold, a system established under the Bretton Woods agreement concluded in 1944. This framework allowed other nations to fix their currencies to the dollar, which could be exchanged for gold at a rate of $35 per ounce. This interconnected global financial structure crumbled as pressures evolved—most notably due to the United States running numerous budget deficits during the 1960s. As other countries started exchanging their dollars for gold fearing an insufficiency of U.S. gold reserves, President Nixon made the controversial decision to temporarily suspend the convertibility of the dollar into gold, effectively transitioning to a fiat currency system where the dollar would no longer have intrinsic value backed by a physical asset.